The Coronavirus Aid, Relief, and Economic Security (CARES) Act of 2020 provided fast and direct financial assistance for individuals and small businesses impacted by the COVID-19 pandemic.
Part of that assistance benefitted student loan borrowers by suspending federal student loan payments, applying a 0% interest rate, and halting collections on defaulted loans.
Initially, the student loan portion of the CARES Act applied through Sept. 30, 2020, but subsequent legislation extended it several times. Now, interest will begin to accrue again on September 1, 2023, and your first payment will be due starting in October.
Understanding how the CARES Act affects student loans
As part of the CARES Act, the U.S. Department of Education automatically paused eligible federal student loan payments and set the interest rate on those loans at 0%, effective March 13, 2020. This payment pause is known as administrative forbearance.
If your student loans are part of that administrative forbearance, you’re allowed to continue making payments. Your loan servicer will apply those payments to your principal balance once you’ve paid any interest or fees that accrued prior to March 13, 2020.
The CARES Act doesn’t apply to private student loans. But some private student loan lenders, realizing that the pandemic has financially impacted borrowers, provide options for reducing or suspending payments.
Important information: On Aug. 24, 2022, President Joe Biden announced up to $10,000 forgiveness for federal student loan borrowers ($20,000 for borrowers who received Pell Grants). However, this plan was blocked by the Supreme Court and will not be enacted. Read more.
What this means for you
If you’re not sure what’s happening with your loans, contact your student loan servicer. You can also log into your account at StudentAid.gov to get your current student loan balance, find out who the servicer is for your federally held student loans, and get their contact information. Alternatively, you can call the Federal Student Aid Information Center at 800-433-3243.
Tip: If you have private student loans and are struggling to make your payments, call your loan servicer to ask about available relief options. You might also be able to refinance your private student loans to get a lower interest rate or extend your loan term, thus lowering your monthly payments.
Find out if refinancing is right for you
See Your Refinancing OptionsWhat happens to existing student loans when the CARES Act pause expires?
Interest will begin accruing on federal student loans starting on September 1, 2023, and you should receive a billing statement at least three weeks before your first payment is due. Your first payment is expected to be due starting in October.
Automatic payments won’t resume for most borrowers after the pause expires, according to the Department of Education. So if your payments were set up to auto-debit from your bank account before the pause, you’ll likely to have enroll in autopay again. If you opted out of the payment pause and are currently paying via auto-debit, your payments should continue as normal. Log in to your account to confirm your settings so you don’t miss your first payment.
Important: Though student loan payments will resume after September 1, 2023, you still have some leeway. The Department of Education is creating a one-year “on-ramp” period to help borrowers who can’t afford their payments. During this time, missed, partial, or late payments won’t be reported to credit agencies and borrowers won’t be subject to loan default or collection attempts.
However, those who can make payments should do so — your loans will st